Best equipment business loans in May 2023

Written by
Michelle Honeyager
Edited by
Helen Wilbers
May 30, 2023
Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money.

Compare the best equipment loans in May 2023

LENDER AND LOAN TYPE BEST FOR MIN. FICO CREDIT SCORE LOAN AMOUNT REQ. TIME IN BUSINESS
Taycor Financial equipment financing Flexible requirements 550 Up to $$500 to $5 million Startup eligible
Triton Capital equipment financing Long preapproval period 600 $10,000 to $500,000 Startups eligible
National Funding equipment leases Equipment leasing 600 $10,000 to $150,000 2 years
SMB Compass equipment financing Large amounts 600 $25,000 to $5 million 1 year
Balboa Capital commercial truck financing Truck financing 620 Up to $500,000 1 year
Funding Circle term loan Low revenue requirement 660 $25,000 to $500,000 2 years
Bank of America equipment financing Established busiensses Not disclosed $25,000 and up 2 years

Taycor Financial equipment financing: Best for flexible requirements

Minimum FICO credit score
550
Min business credit score
600 Paynet
Minimum annual revenue
None for loans under $250,000; must demonstrate enough cash on hand to cover 5% of cost
Minimum time in business
Startups eligible
APR from
4.99% to 35.00%
Loan amount
$500 to $5 million
Term lengths
12 to 84 months
Fastest funding
1 day

Overview: Taycor Financial has offices in California and Utah, and has been around for about 30 years. Taycor’s equipment financing that helps newer businesses and startups access funding. 

Why Taycor Financial equipment financing is best for flexible requirements: Taycor works with startups if the owners have three or more years of related experience. Plus, there are no minimum annual revenue requirements for loans under $250,000. Minimum credit score requirements are also low at 550. 

Who Taycor Financial equipment financing is good for: Newer startups that need more leniency in requirements or established businesses with lower credit. 

Pros:

  • Works with startups 
  • Low credit score requirement 
  • No minimum annual revenue requirement 

Cons: 

  • No prequalification tool online 
  • Interest rates can be high 
  • Origination fee

Triton Capital equipment loans: Best for long preapproval period

Minimum FICO credit score
600
Minimum annual revenue
$350,000
Minimum time in business
Available to startups
APR from
5.99% to 24.99%
Loan amount
$10,000 to $500,000
Term lengths
12 to 60 months
Fastest funding
1 day

Overview: Triton Capital, a loan marketplace, is based in San Diego and focuses on faster funding in as little as two days. Trion offers a business equipment loan program with lasting preapproval periods for if you need time to compare or access the equipment. 

Why Triton Capital equipment loan is best for long preapproval period: Triton’s preapproval is good for 90 days, and that includes a rate lock for that time period. 

Who Triton Capital equipment loan is good for: Businesses that may need the time to shop around for loans or take time to secure specialty equipment or large fleets, like specialty manufacturers or large transportation companies. 

Pros

  • Preapprovals good for 90 days
  • Near-instant loan estimates 
  • Works with startups 

Cons 

  • $150 to $750 documentation fee 
  • High annual revenue requirement
  • Small max amount for an equipment loan

National Funding equipment leases: Best for equipment leasing

Minimum FICO credit score
600
Minimum annual revenue
$250,000
Minimum time in business
2 years
Interest rate from
4.99%
Loan amount
$10,000 to $150,000
Term lengths
2 to 5 years
Fastest funding
1 day

 

Overview: National Funding was founded in 1999 and lists itself as both a small business funding company and an equipment leasing company. It offers loans for any type of new or pre-owned equipment. 

Why National Funding equipment leases are best for equipment leasing: A standout for National Funding is the Guaranteed Lowest Payment program for equipment leases. It also has no down payments or collateral required on new or pre-owned equipment leases. 

Who National Funding equipment leases is good for: Any company that wants to focus on leasing equipment, such as a transportation company that likes to replace vehicles every few years to keep the fleet updated. 

Pros

  • Possible prepayment discount
  • No collateral on leases 
  • Lowest guaranteed payment on leases 

Cons

  • Max interest rate not disclosed
  • Small maximum loan amount
  • No online prequalification tool

SMB Compass equipment financing: Best for large amounts

Minimum FICO credit score
600
Minimum annual revenue
$100,000
Minimum time in business
1 year
Interest rate from
5.99%
Loan amount
$25,000 to $5 million
Term lengths
Up to 10 years
Fastest funding
1 day

 

Overview: SMB Compass states it has expertise in SBA, asset-based and equipment lending and has provided over $250 million to over 1,250 businesses. Its equipment financing loans are funded through partner lenders.

Why SMB Compass equipment financing is best for large amounts: As mentioned above, SMB Compass’s equipment leases go all the way up to $5 million. However, loan amount ranges also start at $25,000, making this a solid option for a wide range of loan uses. 

Who SMB Compass equipment financing is good for: Companies that need a high amount of funding, such as expanding larger factory locations and expanding large fleets of commercial vehicles. 

Pros

  • Works with most industries 
  • High lending amount is $5 million 
  • Terms up to 10 years

Cons

  • Not available in California 
  • No sole proprietorships 
  • Funding comes from partners 

Balboa Capital commercial truck financing: Best for truck financing

Minimum FICO credit score
620
Minimum annual revenue
$100,000
Minimum time in business
1 year
Interest rate from
Not disclosed
Loan amount
Up to $500,000
Term lengths
24 to 60 months
Fastest funding
Same day

 

Overview: Balboa Capital, a division of Ameris Bank, claims to have funded over $7 billion nationwide. It has programs that focus specifically on truck financing. 

Why Balboa Capital commercial truck financing is best for truck financing: If you’re looking to finance commercial vehicles, such as a fleet of trucks, Balboa’s flexible terms and same-day funds after approval make this lender an attractive choice. 

Who Balboa Capital commercial truck financing is good for: Any company that needs trucks, such as transportation companies, and has at least fair credit.

Pros

  • Application takes minutes 
  • Approval in one hour 
  • Reasonable qualification requirements

Cons

  • Higher credit score requirement 
  • No weekend customer support
  • Interest rates not disclosed 

Funding Circle term loan: Best for low revenue requirement

Minimum FICO credit score
660
Minimum business credit score
400 Experian acquisition score
Minimum annual revenue
$50,000
Minimum time in business
2 years
Interest rate from
7.49%
Loan amount
$25,000 to $500,000
Term lengths
6 months to 7 years
Fastest funding
2 days

 

Overview: Funding Circle has been around since 2010 with locations in Denver and London. It offers business term loans that you can use for equipment financing. 

Why Funding Circle term loan is best for low revenue requirement: Funding Circle has the lowest listed annual revenue requirement on the list at $50,000 per year. 

Who Funding Circle term loan is good for: Newer or smaller businesses that make less annually and may not qualify for an equipment-specific loan.

Pros

  • Approval as little as one day
  • Lower annual revenue requirement 
  • Timely payments build credit

Cons

  • Relatively high credit score requirement
  • Origination fee up to 8.49%
  • Only one payment option (monthly)

Bank of America equipment financing: Best for established businesses 

Minimum FICO credit score
Not disclosed
Minimum annual revenue
$250,000
Minimum time in business
2 years
Interest rate from
6.50%
Loan amount
From $25,000
Term lengths
Up to 5 years
Fastest funding
10 business days

 

Overview: Bank of America is a household name and, as the second-largest bank in the nation, has physical locations all across the country. It offers equipment financing and loans to established businesses. 

Why Bank of America equipment financing is best for established businesses: Bank of America’s high minimum loan amount and stiff qualification requirements mean this loan is best for well-established companies that need to make a large purchase. Though Bank of America doesn’t disclose its maximum interest rate, its starting rate is competitive.

Who Bank of America equipment financing is good for: Established businesses like manufacturers or trucking companies that have been in business for a couple of years and make a high amount of annual revenue.

Pros

  • No max on loan amount
  • Physical locations 
  • Free business credit score/resources 

Cons

  • High annual revenue requirement 
  • High minimum funding amount
  • Maximum interest rate not disclosed

The Bankrate guide to choosing the best fast business loans

If you run a business that needs large or expensive equipment, odds are you’ll need a business equipment loan. Heavy machinery and specialized equipment can cost far more than most businesses have in liquid funds. Luckily, equipment loans can offer reasonable interest rates and amounts all the way up to $5 million. 

Bankrate has amassed a list of the best equipment business loans. We’ve made sure to include lenders that work with startups as well as established businesses. We selected the lenders based on loan requirements, unique features and availability across the U.S. 

What is an equipment loan? 

Equipment loans are generally a type of term loan that is used to purchase large-scale equipment for business use. Equipment loans might help with purchasing point-of-sale systems, commercial trucks, farming equipment, manufacturing machinery or medical devices, as a few examples. 

Most are secured loans with the equipment you purchase as collateral, meaning the lender can take the equipment if you do not make loan payments. Equipment loans lead to ownership of the equipment, unlike leases, which allow you to finance equipment for a number of years before the equipment goes back to the lender. 

How does an equipment loan work? 

You would apply like any other type of loan, but in the application, you usually have to specify the equipment you wish to finance. You then get a lump sum of money to acquire that equipment. Depending on the lender and your qualifications, your loan amount could be greater than the purchase price of the equipment to help you cover soft costs, such as delivery or installation. Or you might receive a percentage of the equipment's purchase price, leaving you to cover the rest.

You pay back the loan over the term with interest. The payment schedule can be weekly, monthly or even annually or semi-annually, depending on what the lender allows. Annual and semi-annual payments benefit businesses that make money seasonally, such as farms.

Requirements for an equipment loan 

Requirements vary by lender. Some work with startups and others require at least two years in business. You may also see annual revenue requirements going from $50,000 to $250,000 or more. Personal credit score minimums often fall in the low to mid 600s, though some lenders will take credit scores in the 500s. 

You may also have to show other financial health indicators, like no personal bankruptcies over a certain time period or showing enough cash flow to cover a percentage of the equipment. 

When you apply, you’ll have to provide common business documents like bank statements, tax returns, schedule of business debts and cash flow records. 

Types of equipment loan 

There are several types of equipment business loans and leases, which we’ll cover below. 

Equipment financing

This is a common type that operates as a term loan, with one lump sum disbursed to cover the equipment cost. You pay it back with interest over the loan’s term. It’s a good option if you wish to own the equipment. However, you often have to show strong financial health to acquire a loan with good rates. 

Equipment lease 

In a lease, you pay the lender for use of equipment. You usually pay monthly on the lease for the set term. These can be positive in cases where you want the equipment for a limited time. For instance, a taxi company may not want to own the fleet of vehicles because wear and tear limit the vehicles’ lifespan. However, if you eventually want to own the equipment, leasing is not a good option, unless your lease contract has a purchase option.

Refinance loan 

Refinance loans allow you to apply for a new equipment loan to pay off the old one. The new loan’s rates and terms replace the old. It can be a good way to get better rates or more favorable terms, especially if your credit has improved since you received the first loan. However, it may not be the best option if rates are higher at the moment or you are close to paying off the loan. 

Sale leaseback 

With a sale leaseback, you sell an asset to a financing company and then lease that asset for the term of the lease. It’s a way for businesses to free up capital that was previously in the equipment. However, it might not be a good option if you want to keep the equipment over the long term. 

 Semi-truck financing 

Some equipment loans take the form of semi-truck financing. These are set up to fund semi trucks specifically, so the loan amounts might be more in line with what new and used trucks are going for. Pre-approval may stay good for weeks and gives you time to find the right truck. However, you might see drawbacks like higher rates because semi trucks can be a risk to finance. You may also face high down payment requirements.

Pros and cons of equipment loans 

To help you determine if equipment loans are right for you, below are some pros and cons to consider.

Pros

  • Depending on the financing type, paying on the loan could lead to owning the equipment. 
  • Some lenders report payments to credit agencies and you could boost your credit score.
  • Equipment loans can be a good way to access equipment you otherwise could not afford. Some people use the equipment to start businesses, some expand operations and others just need to update old equipment.

Cons

  • Interest rates may be high, especially if you have a low credit score or limited time in business.
  • While some lenders work with startups, you still often have to prove financial stability and many lenders have strict requirements for approval. 
  • You have to make sure you can make the payments. Most equipment loans use the equipment as collateral, which means the lender takes the equipment back if you default on the loan.

Who should get an equipment loan? 

Thanks to their relatively low rates, equipment loans are one of the best ways to purchase equipment you don’t have the liquid funds to buy outright.

You’ll have the easiest time finding an equipment loan if you can prove you’ve been in business for at least two years. Lenders may also want to see a certain amount of cash flow, so usually minimum annual revenue requirements can go from $50,000 to $250,000 or higher. A credit score in the good or excellent range can also help with approval and lower interest rates. 

If you don’t meet these requirements, some lenders work with startups if you can prove personal financial health. 

You may not want to pursue an equipment loan just yet if your record shows bankruptcy in the last several years, you have low annual revenue or you have a poor credit score. 

If you’re a new business and have doubts about your potential revenue, it may be wise to hold off until you have solid projections. Defaulting will damage your credit score and make getting another loan difficult. On the other hand, if you need certain equipment to operate your business, you may not have the option to wait.

Lightbulb

Bankrate Insight

While looking for equipment loans, you may run across scams or just bad contracts. Some red flags to watch out for include:

  • The lender demands you make a decision now without having time to consider everything.
  • The contract terms are vague or you spot hidden fees.
  • You talk to the lender and they are not forthcoming in answering questions.
  • Promises of guaranteed approval are fishy, as no reputable lender guarantees approval without review. 
  • When looking for equipment like trucks, you might run into dealership scams, which can use high-pressure sales tactics to push unfavorable loans with higher rates. 

Alternatives to equipment loans 

If you decide an equipment loan isn’t for you, you can look into alternatives for equipment loans, some of which are even unsecured. 

Business credit cards 

Consider business credit cards if you can find one with a high enough limit or if the equipment you’re working to purchase is less expensive. Credit cards come with added perks, like cash back and fuel points. 

Microloans 

You might look into microloans if you’re purchasing less-expensive equipment. SBA microloans go up to $50,000, for instance. You may also find options like peer-to-peer lending or crowdsourcing options for microloans, which can be good alternatives for smaller companies and startups that do not meet the requirements of other lenders. Just know that interest rates are likely to be higher and terms shorter than equipment loans offer.

SBA 7(a) 

These SBA loans can help you purchase equipment or machinery. But they’re more flexible than dedicated equipment loans. SBA 7(a) loans can also fund a wide variety of other business purposes. If you need equipment and other funding for uses like inventory or working capital, you might want to look into this loan type. This loan type goes all the way up to $5 million.

Crowdfunding

Crowdfunding platforms let you run funding campaigns to gather money from potential customers. With most types of crowdfunding, you don’t have to repay the money, though you may have to offer other incentives to contributors. Plus, you don’t need to meet a creditworthiness threshold to launch a campaign. However, your success depends entirely on how much buzz you generate around your business. 

Where to get equipment loans 

Both traditional and online lenders offer equipment loans.

Traditional lenders: These include banks and credit unions. Approval requirements tend to be stricter, but you can often have face-to-face assistance and banks are more likely to help you build credit or graduate you to other lending options. Additionally, interest rates often start lower. 

Online lenders: These may include online banks or fintechs. They tend to have less strict requirements, as they typically focus on providing funding to companies that could not get funding elsewhere. However, you lose that in-person banking experience.

FAQs about equipment business loans

Methodology

To choose the best equipment financing, we ensured all loans featured are broadly available across the United States. We then considered features that make loans affordable and accessible to businesses with different characteristics and needs, including interest rates, required time in business, minimum annual revenue and fees. Additionally, lenders were evaluated for notable features such as funding speed, discounts and nontraditional eligibility criteria.